Legacy enterprise software, like well-known CRM and ERP applications, are moving to the cloud, but new kinds of applications will need to be developed to take full advantage of these computing services, said Amazon's Web Services chief.

Such a potential shift to new applications poses a threat to vendors of legacy software, said experts speaking during a panel at TechNW on Monday.

Companies like Oracle, SAP and CA are certifying their software to run on cloud services like Amazon's, said Werner Vogels, CTO of Amazon Web Services. "That doesn't give you immediately all the benefits like scale and elasticity," he said. "For that, new apps have to be developed."

That shift opens doors for new companies to develop services that take full advantage of the cloud but also threatens existing vendors. Vogels said that telecom service offers a good example. For instance, "no one buys their own PBX anymore," he said. Instead, companies are using cloud-based voice services from providers like Twilio, which uses Amazon.

"The telcos are looking at them and thinking, 'what is happening, why can't I move this fast,'" Vogels said. "What cloud allows you to do is, any young business with a good idea can execute faster than any incumbent. I see it all over the place, like in enterprise software moving to the cloud and actually taking the incumbents, the number one and number two, out to lunch."

Citrix, which offers virtualization technologies including for desktops, agrees that the shift away from legacy software is a threat to big incumbent vendors. "It's all desperately bad news for Windows," said Simon Crosby, CTO of Citrix. "There's this thing that's paying the bills and it's not Azure." Azure is Microsoft's new cloud platform service. Crosby suggests that Microsoft will struggle to earn enough revenue from Azure to compensate for slowing Windows sales in the future. That slowdown isn't even starting to happen though, with the latest version of Windows selling well.

Still, the executives expect software built on systems from incumbents will be around for a long time. "There are a lot of legs in legacy," said Crosby. Legacy equipment will retire along with the work force that installed it, meaning it will be around for a long time, he said.

Microsoft hopes to be at the confluence of three trends, which it expects will result in a significant new opportunity. The consumerization of IT, mobility and cloud computing are coming together to "light up the experience for the end user," said Doug Hauger, general manager of Windows Azure for Microsoft.

"Innovating in that space where those three come together will be incredibly fruitful for people and there's a lot of space there," he said. Microsoft hopes to nurture third-party vendors that want to build services on Azure to deliver to popular mobile devices, for instance.

Hauger stressed that it's not all about developing solely on offerings from Microsoft. "It's about building loosely coupled distributed application platforms. Building things that are truly services that can be moved back and forth, on premise and off, from Microsoft to Amazon. That mobility is so critical. If applications are built as monolithic platform stacks, it makes them very hard to move back and forth," he said.

That means that a service provider may build an application on Azure for users of the iPhone or build a service on Amazon that is used by Windows PC users, he said.

In addition to new services aimed at end users, startups are building IT services on top of the compute offerings. "There's a rich ecosystem of supplemental services," said Vogels. For instance, third-party vendors are developing geolocation and telephony services that users of cloud services may want to incorporate into their services, he said.